Caesars Is in Bankruptcy, But It’s Still Business as Usual for the Gaming Giant

Steven Church and Andrew Harris, Bloomberg

- Jan 18, 2015 8:00 am

Skift Take

Atlantic City’s collapse, Las Vegas’ hype-competition, and fallout in Macau from the crackdown on corruption add up to a very bad time to be Caesar’s.

— Jason Clampet

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Caesars Entertainment Corp.’s main operating unit can continue business as usual for now as its owners try to rid it of about $10 billion in debt in bankruptcy court.

U.S. Bankruptcy Judge Benjamin Goldgar in Chicago granted a series of routine motions Thursday, allowing the casino operator to pay employees and critical vendors and maintain its customer- rewards program, just hours after the unit filed for creditor protection while it seeks approval of a restructuring plan.

Creditors who oppose the company’s plan asked a bankruptcy judge in Wilmington, Delaware, Jan. 12 to put the unit into involuntary bankruptcy to halt the restructuring. The judge in that case said Thursday that Caesars could make routine requests to the court in Chicago, while leaving bigger questions to be resolved later.

Goldgar said he didn’t want to exceed the authority granted to him by his counterpart in Delaware.

“Little anxious because I don’t want to go to jail any more than anyone else,” Goldgar said, eliciting laughs from the crowd in the Chicago courtroom.

The two bankruptcy filings this week follow months of negotiation and litigation over how best to reduce the billions in debt that Las Vegas-based Caesars assumed in a 2008 buyout that was arranged by Leon Black’s Apollo Global Management and David Bonderman’s TPG Capital Management.

Protecting Plan

Caesars’ reorganization strategy protects Apollo and TPG by putting the operating unit and its affiliates in bankruptcy while keeping out the parent, Caesars Entertainment Corp. The company has been building support for the plan among senior noteholders. Lower-ranking creditors say the restructuring treats their claims unfairly.

The operating unit, which filed with more than 100 affiliates, listed about $12.4 billion in assets and $19.9 billion in liabilities in Chapter 11 documents in Chicago.

It remains to be seen how the case will play out. When two bankruptcies for the same company are sought in different jurisdictions, the judge in the case that was filed first determines where they will be heard.

U.S. Bankruptcy Judge Kevin Gross in Wilmington said Thursday that he would like to hold a trial this month over that question.

The company said its pact with senior debt holders requires it to file a refinancing plan within 45 days in bankruptcy court and get a judge’s approval of its debt-cutting deal within 110 days.

The proposal has received support from more than 80 percent of first-lien noteholders, Caesars said in a statement. The plan would cut the annual interest expense about 75 percent, to approximately $450 million from about $1.7 billion.

The voluntary case is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago). The involuntary case is In re Caesars Entertainment Operating Co., 15-10047, U.S. Bankruptcy Court, District of Delaware (Wilmington).

–With assistance from Michael Bathon and Dawn McCarty in Wilmington and Linda Sandler in New York.

This article was written by Steven Church and Andrew Harris from Bloomberg and was legally licensed through the NewsCred publisher network.

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